KP’s financial straits deepen as Islamabad holds back dues

PESHAWAR: The Khyber Pukhtunkhwa (KP) government is facing a serious financial crisis due to the federal government’s failure to provide the province with the promised funds, under multiple heads, over the past five years.

According to official documents available with Hum News English, the federal government has, so far, allocated only Rs103 billion for tribal districts under the Accelerated Implementation Programme (AIP), instead of the promised Rs500 billion from 2018-19 to 2022-23 under National Finance Commission (NFC) Award, leaving the province with a staggering deficit of Rs397 billion.

The crisis has been further aggravated by the federal government’s failure to pay its dues to the tune of Rs710 billion under the heads of development funds and net electricity profit.

After the merger of tribal areas into KP, the federal government had to ensure that an NFC award is held to allocate 3 per cent share from the divisible pool for the development and social uplift of the warn-torn districts. However, not a single meeting has been held so far regardless of who was in power in Islamabad.

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The documents also reveal that even out of the allocated budget of Rs107 billion for tribal districts under AIP, only Rs60 billion have been received by the province, while Rs47 billion were still outstanding resulting in large budget cuts for developmental projects in the tribal districts.

For the resettlement of internally displaced persons (IDPs), Rs17 billion were earmarked, but no payment has been made to the province by the federal government.

Similarly, out of the dedicated Rs25 billion for tribal districts development, only Rs19.85 billion have been released to the province, with over Rs5 billion still pending.

Overall, KP owes Rs144.4 billion for ongoing and development budgets, per the documents.

Article 161 of the Constitution binds the federal government to pay the net electricity profit to the provinces. Only Rs4.9 billion was paid in the last fiscal year, while Rs57 billion were still due to be paid.

In the first nine months of the previous fiscal year, the Federal Board of Revenue had collected Rs5,155 billion, of which KP’s share was Rs471.3 billion under the 7th NFC Award in 2009, but the province has received only Rs457.7 billion so far, with Rs13 billion still outstanding against the centre.

Similarly, KP owes Rs18.6 billion in federal taxes with the federal government is supposed to pay Rs32.2 billion to the province.

According to Article 160 of the Constitution, provinces are entitled to a share in the NFC Award based on their population and other requirements.

The 7th NFC Award remains in conflict with the Constitution sincethe former tribal areas were not part of KP in 2009 and hence, did not come under the ambit of its framework.